the resources thus economized together with other funds to the immediate purchase of new armaments and equipment. Under this temporary arrangement the peace strength of the army in 1908 consisted of 1939 officers and civilians, 19,416 non-commissioned officers and men and 2661 horses and mules; it is calculated that the reserves will furnish about 77,000 men and the territorial army about 37,000 men in time of war.
Military service is obligatory, and liability to serve begins from the twenty-first year. The term of service comprises two years in the active army, ten years in the active army reserve (for cavalry eight years), eight years in the territorial army (for cavalry ten years) and ten years for all branches in the territorial army reserve. As a rule, however, the period of service in the active army has hitherto been considerably shortened; with a view to economy, the men, under the law of 1904, receive furlough after eighteen months with the colours. Exemptions from military service, which were previously very numerous, are also restricted considerably by the law of 1904, which will secure a yearly contingent of about 13,000 men in time of peace. The conscripts in excess of the yearly contingent are withdrawn by lot; they are required to receive six months’ training in the ranks as supernumeraries before passing into the reserve, in which they form a special category of “liability” men. Under the temporary system of 1906 the contingent is reduced to about 10,000 men by postponing the abrogation of several exemptions, and the period of service is fixed at fourteen months for all the conscripts alike. The field army as constituted by the law of 1904 consists of 3 divisions, each division comprising 2 brigades of infantry, each of 2 regiments of 3 battalions and other units. There are thus 36 battalions of infantry (of which 12 are cadres); also 6 battalions of evzones (highlanders), 18 squadrons of cavalry (6 cadres), 33 batteries of artillery (6 cadres), 3 battalions of engineers and telegraphists, 3 companies of ambulance, 3 of train, &c. The artillery is composed of 24 field batteries, 3 heavy and 6 mountain batteries; it is mainly provided with Krupp 7·5 cm. guns dating from 1870 or earlier. After a series of trials in 1907 it was decided to order 36 field batteries of 7·5 cm. quick-firing guns and 6 mountain batteries, in all 168 guns, with 1500 projectiles for each battery from the Creuzot factory. The infantry, which was hitherto armed with the obsolete Gras rifle (·433 in.), was furnished in 1907 with the Mannlicher-Schönauer (model 1903) of which 100,000 had been delivered in May 1908. Hitherto the gendarmerie, which replaced the police, have formed a corps drawn from the army, which in 1908 consisted of 194 officers and 6344 non-commissioned officers and men, but a law passed in 1907 provided for these forces being thenceforth recruited separately by voluntary enlistment in annual contingents of 700 men. The participation of the officers in politics, which has proved very injurious to discipline, has been checked by a law forbidding officers below the rank of colonel to stand for the Chamber. In the elections of 1905 115 officers were candidates. The three divisional headquarters are at Larissa, Athens and Missolonghi; the six headquarters of brigades are at Trikkala, Larissa, Athens, Chalcis, Missolonghi and Nauplia. In 1907 annual manœuvres were instituted.
The Greek fleet consisted in 1907 of 3 armoured barbette ships of 4885 tons (built in France in 1890, reconstructed 1899), carrying each three 10·8-in. guns, five 6-in., thirteen quick-firing and smaller guns, and three torpedo tubes; 1 cruiser of 1770 tons (built in 1879), with two 6·7-in. and six light quick-firing guns; 1 armoured central battery ship of Navy. 1774 tons (built 1867, reconstructed 1897) with two 8·4 in. and nine small quick-firing guns; 2 coast-defence gunboats with one 10·6-in. gun each; 4 corvettes; 1 torpedo depôt ship; 8 destroyers, each with six guns (ordered in 1905); 3 transport steamers; 7 small gunboats; 3 mining boats; 5 torpedo boats; 1 royal yacht; 2 school ships and various minor vessels. The personnel of the navy was composed in 1907 of 437 officers, 26 cadets, 1118 petty officers, 2372 seamen and stokers, 60 boys and 99 civilians, together with 386 artisans employed at the arsenal. The navy is manned chiefly by conscription; the period of service is two years, with four years in the reserve. The headquarters of the fleet and arsenal are in the island of Salamis, where there is a dockyard with naval stores, a floating dock and a torpedo school. Most of the vessels of the Greek fleet were in 1907 obsolete; in 1904 a commission under the presidency of Prince George proposed the rearmament of the existing ironclads and the purchase of three new ironclads and other vessels. A different scheme of reorganization, providing almost exclusively for submarines and scout vessels, was suggested to the government by the French admiral Fournier in 1908, but was opposed by the Greek naval officers. With a view to the augmentation and better equipment of the fleet a special fund was instituted in 1900 to which certain revenues have been assigned; it has been increased by various donations and bequests and by the proceeds of a state lottery. The fleet is not exercised methodically either in navigation or gunnery practice; a long voyage, however, was undertaken by the ironclad vessels in 1904. The Greeks, especially the islanders of the Aegean, make better sailors than soldiers; the personnel of the navy, if trained by foreign officers, might be brought to a high state of efficiency.
The financial history of Greece has been unsatisfactory from the outset. Excessive military and naval expenditure (mainly due to repeated and hasty mobilizations), a lax and improvident system of administration, the corruption of political parties and the instability of the government, which has rendered impossible the continuous application of any scheme of fiscal reform—all alike Finance. have contributed to the economic ruin of the country. For a long series of years preceding the declaration of national insolvency in 1893 successive budgets presented a deficit, which in years of political excitement and military activity assumed enormous proportions: the shortcomings of the budget were supplied by the proceeds of foreign loans, or by means of advances obtained in the country at a high rate of interest. The two loans which had been contracted during the war of independence were extinguished by means of a conversion in 1889. Of the existing foreign loans the earliest is that of 60,000,000 frs., guaranteed by the three protecting powers in 1832; owing to the payment of interest and amortization by the powers, the capital amounted in 1871 to 100,392,833 fr.; on this Greece pays an annual sum of 900,000 fr., of which 300,000 have been granted by the powers as a yearly subvention to King George. The only other existing foreign obligation of early date is the debt to the heirs of King Otho (4,500,000 dr.) contracted in 1868. A large amount of internal debt was incurred between 1848 and 1880, but a considerable proportion of this was redeemed with the proceeds of the foreign loans negotiated after this period. At the end of 1880 the entire national debt, external and internal, stood at 252,652,481 dr. In 1881 the era of great foreign loans began. In that year a 5% loan of 120,000,000 fr. was raised to defray the expenses of the mobilization of 1880. This was followed in 1884 by a 5% loan of 170,000,000 fr., of which 100,000,000 was actually issued. The service of these loans was guaranteed by various State revenues. A “patriotic loan” of 30,000,000 dr. without interest, issued during the war excitement of 1885, proved a failure, only 2,723,860 dr. being subscribed. In 1888 a 4% loan of 135,000,000 fr. was contracted, secured on the receipts of the five State monopolies, the management of which was entrusted to a privileged company. In the following year (1889) two 4% loans of 30,000,000 fr. and 125,000,000 fr. respectively were issued without guarantee or sinking fund; Greek credit had now apparently attained an established position in the foreign money market, but a decline of public confidence soon became evident. In 1890, of a 5% loan of 80,000,000 fr. effective, authorized for the construction of the Peiraeus-Larissa railway, only 40,050,000 fr. was taken up abroad and 12,900,000 fr. at home; large portions of the proceeds were devoted to other purposes. In 1892 the government was compelled to make large additions to the internal floating debt, and to borrow 16,500,000 fr. from the National Bank on onerous terms. In 1893 an effort to obtain a foreign loan for the reduction of the forced currency proved unsuccessful. (For the events leading up to the declaration of national bankruptcy in that year see under Recent History.) A funding convention was concluded in the summer, under which the creditors accepted scrip instead of cash payments of interest. A few months later this arrangement was reversed by the Chamber, and on the 13th December a law was passed assigning provisionally to all the foreign loans alike 30% of the stipulated interest; the reduced coupons were made payable in paper instead of gold, the sinking funds were suspended, and the sums encashed by the monopoly company were confiscated. The causes of the financial catastrophe may be briefly summarized as follows: (1) The military preparations of 1885–1886, with the attendant disorganization of the country; the extraordinary expenditure of these years amounted to 130,987,772 dr. (2) Excessive borrowing abroad, involving a charge
